I am sure you have heard of this debate before, so I won’t be explaining just what it is. But I do have a question: what in your opinion is the biggest roadblock to having free markets? I am going to step out on a ledge and claim that you immediately thought of government intervention. It is the intervention of governments into free markets that messes them up and prevents them from doing what they do so well.
Am I right?
If I am, I think you now have proof of the manipulation of a public debate.
Think back to any financial crash you want. All the way back to 1929. Maybe the Savings and Loan Debacle. Or the Great Recession of 2008. Or the several times the Stock Market went haywire and we had a mini-crisis lasting just a few days. Were any of those caused by government oversight or government intervention? Any? Hmm, that’s interesting. If government intervention doesn’t cause financial panics or crashes, then what does? Let’s see, in 1929 it was runaway speculation by people playing the market to make easy money. In 2008, a major cause was the selling of bogus “financial instruments,” bundling lousy mortgages together and calling them Triple-A investments. Also, lenders were scheduling iffy housing loans based upon those faulty financial instruments. There was an element of governmental controls during the S&L crisis as those regulations put many S&Ls into a box.
But, by and large, most of the financial crises have occurred because of market manipulation by market participants, not by government intervention.
For example, it was not long ago that corporations were not allowed to buy their own stock. It was thought that that would lead to stock price manipulation. But in the Clinton administration the business sector offered “campaign donations” to one and all if they would accept the reforms they thought were needed. One of those was to allow corporations to buy their own stock. At the same time regulations were passed to encourage corporations to pay their executives in stock options, rather than cash, to “give them a stake in the company.” You will have noticed that the majority of American corporations took their Trump administration tax cuts and used then to . . . create jobs, modernize their infrastructure, develop new products . . . uh, no, just kidding; they bought stock with the money, often their own stock. By executives deciding to buy their own stock, they drove up the price of their own stock, which made their shareholders happy, and made their salary payment in stock more remunerative for themselves. Do the right thing for their employees and society at large? Not on the agenda.
The “free market debate” isn’t a debate, it is a false dichotomy. The people promoting that this as an actual debate want there to be just two sides: one where the government messes things up, which it rarely does and one in which free markets, without any manipulation work like miracles. Somehow they always seem to leave out the markets as they really are: markets manipulated up the yin-yang by participants in the markets themselves.
Oh, and the days in which government dreamt up regulations on its own are long past. All new regulations are proposed by the industries being regulated themselves and is it any wonder those regulations seem to favor certain things?